LexisNexis has announced results from the latest LexisNexis Martindale-Hubbell study on law firm and client relationships in Western Europe. The report The Selection and Retention of Law Firms in Western Europe reinforces the view that in initial selection processes, in-house counsel want their law firms to understand their business needs, objectives and culture, whereas the quality of the team overall has the most weight in determining whether firms are retained.

Conducted during January and February 2012, the survey reflects the views of 219 in-house counsel from companies across 16 Western European countries, half of which have revenues of at least €1.3 billion.

The top five factors used by in-house counsel in the initial selection and re-hiring of law firms were found to be:

Selection Factors (% of respondents, rated ‘very important’)

Understanding of business needs, objectives and culture (72%)

Speed of response (56%)

Client service/responsiveness/communication (56%)

Lawyer expertise (54%)

Trusted advisor and not just a legal technician (51%)

Retention Factors (% of respondents)

Quality of the team (80%)

Knowledge of my business (76%)

Cost (71%)

Approach to matter at hand (66%)

Lawyer expertise (62%)

The most important factor – by no means a surprise – was understanding the client’s business needs, with 72% of respondents rating this as ‘very important’. Speedy response times, client service and communication skills and expertise and reputation of the individual lawyer were regarded as the next group of favoured attributes. Interestingly, cost was not a key factor in initial selection processes.

When asked about the magic ingredients of relationships, dedication and chemistry, alongside expertise, quality of ability/competence, cost/fees were common themes. Proficiency in business and legal skills alone were only part of the picture. The people buy people adage was borne out in the results, with over one in four companies prioritizing this factor on their list of requirements, whilst one in two wanted a trusted advisor.

“These trends in selection and retention factors are consistent with similar surveys that we have undertaken in other world regions,” said Derek Benton, director of International Operations at Martindale-Hubbell commented. “From a business development perspective, the message is simple. To get noticed in the identification and selection stages – whether communicating via their own or third party website, blogs, articles, social media and even tender documents – firms need to engage buyers by firstly showing that they understand their sector and how that impacts their day-to-day business.”

Law firms also need to focus on building their relationships with the Chief Legal Officer (CLO), as over two-thirds of respondents said CLOs had primary responsibility for making decisions to appointment firms. Surprisingly, procurement departments were only involved in appointing firms for one in 20 companies surveyed.

Getting on panels seems to be a key objective for many law firms, but surprisingly the survey found that 72% do not use law firm panels and, of these, 78% are not planning to put a panel in place. If a firm has not made it onto a panel, the findings suggest that they are not excluded indefinitely from selection as panels tend to be reviewed every two or three years.

When asked what factors would lead a law firm to be selected for a second time, the quality of the team as a whole was cited by 80% of respondents. This was followed by their knowledge of the business (76%) and cost/approach to billing (71%). Overall standard of service remains critical, as poor service is the fastest route to being removed from a preferred list, according to 93% of survey respondents. Firms still need to keep an eye on costs, and ‘unfair or unclear billing’ can lead to relationships being terminated.  Indeed, achieving better value for money has been the main driver to review panel firms in recent years.

Nevertheless, most law firms were seen as being sensitive to the budgetary pressures of legal departments (60%) and are offering value-added services, with free training topping the list. However, the survey suggests they need to do more to listen and learn from feedback. Nearly all surveyed (93%) said they would be willing to participate in formal client satisfaction surveys, yet only half have actually been asked to participate.

The biggest challenges facing in-house lawyers in the next year are cost control, (62%), increased workload (52%) and litigation/risk managements (44%). The research also showed mixed fortunes ahead for law firms with 20% of companies decreasing legal budgets, whilst 22% expected to increase spend.

To download a free copy of the full report The Selection and Retention of Law Firms in Western Europe visit http://www.martindale-hubbell.co.uk/western-european-ihc?utm_source=BusWire&utm_medium=PressRel&utm_campaign=WesternEuropeanIHC